First Circuit Limits Defense Strategy Of 'Picking Off' Named Plaintiff In Putative Class Action By Offer Of Judgment

In Bais Yaakov of Spring Valley v. Act, Inc., 2015 U.S. App. (1st Cir. Aug. 21, 2015), the First Circuit held that a rejected and withdrawn offer of settlement of a named plaintiff's individual claims in a putative class action made before the plaintiff moved for class certification did not deprive the court of subject-matter jurisdiction. This case does not, however, hold that all pickoff attempts are per se invalid.

Background

In this putative class action brought pursuant to the Telephone Consumer Protection Act (TCPA), the named plaintiff was a private school that had allegedly received unsolicited communications by fax that did not contain required legal disclosures.

In the course of litigation, the parties agreed to a deadline for filing motions for class certification. As the deadline approached, the defendant made a Rule 68 offer of judgment in an amount representing the maximum that it believed the named plaintiff could hope to recover, along with an offer to be enjoined from sending further faxes to the plaintiff, and to pay plaintiff's costs and fees as determined by the court. Four days later, the plaintiff moved for class certification. Shortly thereafter, the 14-day period allowed under Rule 68 for a party to accept the offer of judgment elapsed; as plaintiff had not responded, the offer was deemed withdrawn under the language of Rule 68.

The defendant then moved to dismiss the case, arguing that the named plaintiff's claim was rendered moot because when the plaintiff was offered all relief that it could possibly expect to obtain from the court, there was no longer a case or controversy and the court was divested of subject-matter jurisdiction. The trial court denied the motion and the question was certified to the First Circuit on an interlocutory appeal.

Decision

Although the First Circuit affirmed the denial of the motion to dismiss, it did not follow the trial court's analysis. The trial court had relied on a Supreme Court case, Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 340, 100 S. Ct. 1166, 63 L. Ed. 2d 427 (1980). In Roper, the Supreme Court had held that full payment of a plaintiff's individual claims after a motion for class certification had been denied did not moot the case because the plaintiffs were entitled to appeal the denial of certification and therefore retained an interest in the outcome. The district court had noted that since the TCPA did not contain a fee-shifting provision and the Rule 68...